What is the background to Ford Thailand’s investment in the country?

Ford Motor Company (FMC) has a significant presence in Thailand through

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the combined strengths of Ford, Mazda, AutoAlliance Thailand,

thePremier Automotive Group and Ford Credit. In 1995, Ford formed a

jointventure with Mazda to establish AutoAlliance (Thailand) (AAT), a

$500m state-of-the-art manufacturing facility in Rayong province. In

1996, we established Ford Sales and Service (Thailand) (FSST), Ford

Leasing (Thailand) and Ford Operations (Thailand). The recently

announced additional investment of $500m into AAT will support new

vehicle programmes and expansion of the plant’s capacity. Ford will

also set up its regional operations headquarters in Thailand by end

2003, under the registered name of Ford Services (Thailand).

How did the operation fare during the Asian crisis?

Despite the fact that AAT was established just prior to the economic

downturn of 1997, it survived and thrived as a global exporter of

one-tonne pickups. The strategy to develop AAT as a global export hub

has paid off. Today, it has surpassed 300,000 units production and it

exports the Ford Ranger and Mazda Fighter to more than 130 markets

worldwide.

How does the relationship between Mazda and Ford work in Thailand?

Ford owns 50% of AAT’s shares and Mazda holds 45%, with the remaining

5% stake owned by Mazda Sales (Thailand) (MST). The Ford-Mazda

partnership combines the best of Mazda’s engineering expertise with

Ford’s global truck and sports-utility vehicle heritage. The keys to

AAT’s success are mutual understanding between Ford and Mazda, a

hardworking team with “can do” spirit, good personnel and labour

management, successful development of supplier base and sound

preparation and launch of new manufacturing process and products. The

product marketing, sales and distribution are handled separately by MST (formed in 1999) and FSST.

How did the company go about achieving an 80% local content?

AAT sourcing strategy determines the selection of parts and components

suppliers based upon technical expertise, quality, cost and material

management. An ASEAN (Association of Southeast Asian Nations)

purchasing director leads a dedicated team that ensures all our

suppliers meet Ford’s global quality standards. The Preferred Supplier

Quality Award (Q-Award) was introduced by AAT to recognise suppliers

that have achieved a continuous standard of quality excellence. In

addition, the ISO14001 – a globally recognised and accepted

environmental standard – is expected from all AAT suppliers. Within

five years, AAT has achieved 80% local content. With a solid supply

base of more than 150 parts and components suppliers, AAT purchases

approximately Bt15bn ($376m) each year from Thai suppliers.

What is the company’s approach to labour relations and training?

Ford is committed to fair treatment of employees. With manufacturing

facilities in more than 20 countries, it has relationships with over 50

unions around the world. Together with our union representatives, we

work to ensure that the workers’ needs are met through open dialogue

and two-way communication.

Ford recognises the importance and competitive advantage of a

well-educated, trained and informed workforce. A great deal of emphasis

is placed on education and training, through programmes such as

continuing education, overseas training, student internships,

scholarships, graduate programmes and Vehicle Industry Certificate

programmes for operators.

Is there any way in which the government of Thailand could improve the environment for FDI?

Ford recognises that there is tremendous potential in Thailand and

overall in Asia, and sees the country as a strong hub within ASEAN. We

can identify several areas in which Thailand can further its appeal as

a location for automotive FDI. First, the imminent review of the

vehicle excise tax system presents a great opportunity to create a fair

and transparent system. Ford is in favour of a “value-based” excise

tax, which would create a set of common, easy-to-understand criteria

for the taxation of cars and trucks. Second, we would urge Thailand to

continue the reforms in the Customs Department. Too often, foreign

multinational companies that are trading fairly unwittingly become

wrapped up in the Customs Department’s “red tape”, which hampers

efficiency. Finally, Thailand should keep developing its reputation as

a firm advocate of free trade – in ASEAN and beyond.

What is AAT’s current investment programme?

FMC chairman and CEO Bill Ford announced on October 13, 2003 that Ford

and Mazda would invest an additional Bt21bn in AAT. In the next few

years, AAT will embark on a growth plan driven by new vehicle

programmes, with investments in facility upgrades, additional tooling

and engineering, as well as an expansion of the plant’s capacity to

200,000 units, up from the current 135,000.